New financial services technology benefits the consumer and offers an opportunity for telcos to rise above their traditional perceived status as a threat to the financial ecosystem and help operators improve service. This relationship could be the best way to leverage branchless banking services and improve what retail banking industry analysts describe as particularly high rates of financial exclusion in Africa and the Middle East.

In a report Retail Banking in Emerging Countries brought out by Orange Business Services and Efma, Spyros Salpeas, head of Global Services MENA and country manager UAE at Orange Business Services, says telcos are now seen as "valuable partners" that can assist banks in rolling out services that the connected customer now demands and also transition into the domain of branchless, mobile and tech-centric retail banking.

This alliance has given rise to a variety of solutions and services within emerging markets, including mobile money service platforms, ewallets and SMS-based mobile banking. Branchless banking initiatives are said to be at an all-time high (including microfinance and mobile wallet solutions).

However, as Salpeas says in the Report, "Rates of financial exclusion are particularly high in Africa and the Middle East as they are large regions comprised of many countries, each with a widely spread population that includes people of different social and economic groups. In addition, the banks in these markets have been established using a completely different paradigm to those in Western Europe or the US. Rather than building an extensive network of physical branches, all banks in emerging markets serve the majority of their customers via digital channels and only deploy physical branches where they are absolutely necessary,

"Evidently, while this helps to lower operating costs, this approach risks leaving certain sectors of the population – usually those in the rural regions – without access to basic financial services."

Mark McCallum, Director & Head of Global Services Africa, Orange Business Services, lists limited access to necessary infrastructure in some areas, widespread populations, limited to no access to technology, and a large portion of unbanked consumers as some of the factors affecting financial inclusion.

Other challenges to this inclusion raised by McCallum include competition from non-industry players seen as undermining banks' dominant position, security integration and overall integration of the services offering. Telcos are sometimes still viewed as a threat to the banking ecosystem he adds.

However, despite the challenges, there is a strong uptake in Africa of mobile money services and pockets of strength, for example Kenya, underpinned by the emergence of mobile plug-in devices and applications for banking, says McCallum.

Innovation is a differentiator says McCallum and the banks now compete through collaboration with telcos and various other external partners, as well as tapping into resources. "They use established networks, digital infrastructure and communication channels, as well as tapping into their partner/ecosystem established consumer base."

As long as consumer demand for low-cost, flexible solutions continues, and the popularity of online and mobile banking rises, there is likely to be growth in cashless transactions and fuel an increase in online transactions and purchasing.

McCallum warns that the growing popularity of online and mobile banking – and even online purchasing, suggests that in years to come, banks who do not embrace the technology run a high risk of falling by the wayside.